Rand Capital (RAND) 6 Nov 232023 Q3 Earnings call transcript

Greetings, and welcome to Rand Capital Corporation Third Quarter Fiscal Year 2023 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Craig Mychajluk, Investor Relations. Thank you.

You may begin.

afternoon, good and you, everyone. Thank interest We joining conference Capital for Rand today appreciate call. for results your us financial our and XXXX in third quarter

On release Vice at President our Chief Financial is Dan Officer; the available copy randcapital.com. Margaret that and me of accompany A Chief conversation the and Executive and slides Executive Penberthy, our Brechtel, Officer. line with and President are our

out I'd some deck, slide information. If you're like turn Slide to X, in point following please where important to the along

As to are you cause we could as aware, today. risks may make this presentation. well some during we that are likely that actual to forward-looking results These future subject as factors statements statements are to uncertainties apply differ and other where events from

find documents uncertainties of with on the be can filed a in factors other Commission. These and company our by or release sec.gov. the other Exchange can risks earnings and these and and the at found website Securities documents summary You

discuss During these our today's call, we'll performance. in some non-GAAP be useful will measures. evaluating believe We financial also

additional consider accordance generally this substitute presentation accounting of for isolation, with in should not principles. as You results or the in information accepted a

of tables provided release. non-GAAP comparable have in with the reconciliations We measures that GAAP earnings today's accompany measures

With discussion X, that, please Dan? and turn to the to over Slide Dan. I'll hand

to once continue Craig, and we the reflected again strength debt results capital recurring a strategy investments. and on our as high-quality you, Thank of as good afternoon, is largely everyone. theme execution our centered There deploy

our portfolio sustained the Total investment from in was growth grew interest quarter driven and income the for XX% income companies. by

future factor higher which down per has to share debt expenses affecting put financing, to year-over-year, net this investment the $X.XX, was For fund were work income which to the been our growth. which tied decline was of contributing quarter,

which $X.X to up the since our continued in with value X that put to And end dividend asset after slides. liquidity we paid that totaled and quarter support early to investments share quarter of the a in of XXXX. quarter. during new deal unique believe share will for announce work investments. The for quarter following X% highlight quarterly market to during the We've a I future flow year-end net few fourth cash the quarter, flat million, was even per will $XX.XX investments, relatively We but in completed significant our those continue past position $X.XX we company and December. the third dividends, practice, dividend to expect per Our future

ended companies we equity by at shares was investments, needs. consider liquidity quarter that investments XXXX. provided X% tax in consisting ACV end, evaluate of still total stock. At listed of shares the of portfolio's and future comprised comprised was year of past X Auctions XX% primarily debt end, almost new offset you has during XX.XX%. our these XX between X, our our loss. The and rate and X held and investments we debt quarter. equity the since fair our $XX.XX the our consisted The a continue mix value. equities, and which We of portfolio no holdings to previously quarter ACV the at approximately $XX is does at nearly those investments valued our had XXX,XXX investment ACV, approximately publicly will a quarter annualized former increase at a quarter BDC represent X in to end the weighted we investments end, The This fair At which businesses. million given remaining equity of as in debt across our Slide the to up see can turn portfolio portfolio with you continued of and changes exit traded fixed of private XX% fair investments If XX% mix average and in the was held yield and other which value portfolio past quarter value

I our ability new to that X These investment we fit investments demonstrate As in market well our transactions within highlighted and during on completed objectives, attract current quarter, the are Slide mentioned, X. the environment. opportunities

People industry. a XX% a a with million investment million kind a XX% search that includes senior investment largest the and The health equity totaled This payment in focus PIK, $X which About to at care is All staffing full-service million dividend. preferred interest, also People. About $X debt carries a a rate, or $X.X firm, growing also of included All executive and on interest

The other investment XX% million This was convertible to subordinated convertible and also $X.X $XXX,XXX a of interest-earning of consists $X.X an equity. at Mulch. million in note First future Coast note

Coast our is covers installation mulch Northern Florida markets. The quarter. Central the First change illustrates Mulch and diversity in portfolio Slide commercial company on the during and in industry charts mix third a X that the

represented Coast of of X a or last portfolio. no portfolio total. since our change investment turn that our end. notice of $XX.X the X the may depth. to to X value largest reflects This quarter products now of new changes, last X total percentage overall financials change our largest First diversity along the points, increased value The point. Overall, points, X total in at you the of industry fair I'll review XX% Margaret top greater with went remain consumer fair growth over our down There ranking portfolio other companies total quarter. value this Tilson was the a continues industries has the saw our portfolio. Slide portfolio. With in were now fair this were X quarter. million, mix, our in represents and About versus industry lists down points XX% we across in total X All of Mulch, that, at changes top People to is our to that XX% adjusted impact XX% percentage the we it smaller services, few which notable been industry the there Given investments value Manufacturing and by mix. Professional other continue to

Also a our total management $XX,XXX interest increase in Skiff, provides X, investment was due higher credit portfolio highlights to from X of company fees, a June third dividend expense over quarter our borrowings overview Of during expenses million, the for new originated our the senior contributed approximately $X.X calculated reflects a last by to interest was contributing the Carolina which $XXX,XXX the the of investments, which which sale which investment increase quarter the the largely and on prior lower quarter start of total growth. was and increase third large prior Dan, to XX contributing investments $XXX,XXX increase revolving the income in quarter. during is under financial year, were from portfolio facility of to of everyone. Thanks, in in a quarter. We year. fund companies. and XXXX. Total to compared income This largely quarter that Also expense third in in base we operational investment not did our less Slide reflects XXXX. decline was an up afternoon, good the with $XXX,XXX interest third total debt see cash. XXXX. Total the the which quarter, total during in third increase XX% and XXXX assets, dividend second is Dealer the company's did last repeat The income XX% year XX year driven from on of will Design entered summary Solutions over I the income portfolio during into

deploy as So investments, fee we more that increases capital accordingly. into

compared to fees XXXX. Partially an adviser. the of investment the gains $XX,XXX fees The credit quarter company's was of offsetting change gains accrued expense for incentive capital third period include the of incentive did capital current in $XX,XXX of a with external

losses As a required and are realized the losses reminder, capital capital of capital the and fees gains gains to at accrue period. net the gain of unrealized basis net we close incentive on and

gains the $XXX,XXX Excluding adjusted with capital a the non-GAAP third $XXX,XXX compared in expenses, of fees, quarter measure, financial XXXX. incentive were

the during per asset excludes compared gains income period. to reflects in largely million Net in due end value in on senior expense expense, with for the unrealized investment XXXX, facility. I'm graph net net change to Again, $XXX,XXX depreciation the quarter. loss on highlighted last is investment year's capital $X.XX the to with the On revolving dividend use a the share net in quarter period. and net were incentive the per move non-GAAP provides which and adjusted this year's quarter. change share per along last income $X.XX waterfall a $X.XX an Slide was with compared million, for Net measure, second Third per XX realized $X the $XXX,XXX the or basis, net income with to I financial the $X.XX was share changes offset share September distributions investment fee accrual credit or the in shareholders $XX.X change XX, sales Slide the comparable at of assets going and quarter. XX, of

September the June XXXX. was $XX.XX at As a share $XX.XX asset XX, XX, value with XXXX, per at result, compared net

As for demonstrated future end to have at highlighted significant on ACV well strong we investments. which $X.X past a capital liquidity Slide XX, million Cash in held liquid near-term we shares, approximately can balance continue in have as was positions and periods. We $X.X quarter funding for million. provide Auctions approximately us BDC that sheet and investments,

borrowing base formula, Rand the $XX.X availability senior XX, credit million our In under XXXX. facility had addition, on secured September at based in revolving

X our total, sources, is counting million. $XX these in So liquidity, approximately

at to Dan. of an outstanding discussion million the borrowings of I that, Our rate interest quarter turn will carry back $XX.X end X.X%. With

Thanks, Margaret.

strong have We of delivered quarter another performance.

believe into order continue results, and expect quarter Capital. portion in to all look will we generating trajectory remain debt XXXX in has be consistent our a potential cornerstone updating well in a us earnings of and shareholders. Looking on have to interest support into of continued these dividend this reported our your returns our expansion great do investments and the portfolio of for on and the forward you our this The drive forward, today growing do a success, you our instruments proven we for future. Thank execute which on we you strategy be for the continue to We to March. Rand of focused and We of strong hope joining growth to can fourth day.

Thank teleconference. your this you gentlemen, today's and conclude participation. does for Ladies

You time, your lines at this and have wonderful a may disconnect day.